Less than a month after the national credit union movement preserved its federal tax exemption under the new tax law, bankers are trying to split the movement by targeting larger credit unions for a new tax in Iowa.
The Iowa Bankers Association is airing television and radio ads calling for credit unions to be taxed, with rhetoric that paints credit unions as tax evaders.
One spot depicts a young white middle class couple at their home with two children. It says the average Iowa family earns $55,000 and pays $7,000 in income taxes. "Meanwhile, just one Iowa credit union makes $57 million a year. This big credit union, one of the largest in the state, pays nothing in income taxes. Absolutely nothing. It's time for an Iowa tax code that's fair. Let's end the credit union industry's free ride."
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The credit union is not identified, but $57 million matches 2016 net income for the state's largest credit union: University of Iowa Community Credit Union of North Liberty, Iowa ($4.5 billion in assets, 165,295 members).
Altogether, Iowa's 93 federally-insured credit unions had $138 million in net income in 2016, and a 0.86% return on average assets. Assets were $16.9 billion on Sept. 30, up 11% from a year earlier.
The Iowa Credit Union League has produced its own 30-second animated spot, pointing out that Iowa banks paid out $500 million to shareholders, while Iowa credit unions save their members $100 million a year in lower fees and better interest rates.
"If you think banks and credit unions are the same, remember this: One is run for profit, the other is run for you."
The last battle in Washington ended last December when Congress let stand the longstanding federal tax exemption for credit unions whose profits belong to their member owners. But the issue continues in political struggles taking place in states across the nation.
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